RETAILERS REPORT INCREASES IN ORGANIZED THEFT

WASHINGTON - Organized retail theft has become a bigger concern for supermarket operators, according to recent report.

- increased in the past year, Food Marketing Institute here said in the report, titled "Supermarket Security and Loss Prevention 2006."

Among retailers operating more than 100 stores, 92.9% said they had an increase in organized theft in 2005, compared with 2004. Smaller retailers reported a lesser increase in organized theft, but a majority of all retailers surveyed, 62.5%, said incidents of organized theft had grown in that span.

Most companies - 56% - also said they were devoting additional resources to combat the problem, although only 10% said they were participating in a national database designed to track organized theft.

Small and midsized chains were more likely to report allocating additional resources against the problem, with 75% of chains with 10 or fewer stores adding more resources and 62.5% of chains with 11-100 stores devoting more resources. Only 46.2% of chains with more than 100 stores said they allocated more resources to fight organized theft.

Overall, however, most retailers said their shrink levels either declined or stayed even in 2005 against 2004 levels. A little more than one-third, or 36.4%, of retailers said their shrink levels increased in 2005 compared with 2004. Shrink levels tend to be higher at large chains, with a median level of 2.2%, vs. 2.05% for chains with 11-100 stores and 0.75% for chains with 10 or fewer stores.

Retailers ranked employee theft as having the biggest impact on shrink, followed by shoplifting, organized retail theft and bad checks.

Most employee theft takes place at the cash register, but retailers have been able to curb such activity in recent years. The percentage of employee theft occurring at the cash register has fallen from 45% in 2000 to 35% in 2005.

"This may be attributable, at least in part, to improved technology, use of closed circuit TV and POS audits," the report said.

At the same time, however, employee theft at the customer service/courtesy booth and the sales/service area has been on the rise.

Items Most Frequently Shoplifted

Cigarettes 4%

Batteries 4%

Liquor 7%

Analgesics; 16%

Meat 16%

Other 16%

HBC 14%

Razor blades 12%

Baby formula 11%

Employee Theft by Category

Snacking 6%

Not scanning 7%

Voids/refunds 8%

Discounting 9%

Back door 9%

Coupons 1%

Other 3%

Cash theft 30%

Merchandise 28%

(Adds up to 101% due to rounding.)

Shrink as a Percentage Of Department Sales

Dry grocery 0.7%

Dairy 1.1%

HBC 3.2%

GM 3.5%

Meat and seafood 3.7%

Deli 5.9%

Produce 6.5%

Bakery8.5%

Causes of Shrink

2005; 2004

Employee theft 38.1%; 43.3%

Shoplifting/ORT 35.3%; 29.7%

Vendor theft 8.8%; 11.6%

Other 18.1%; 15.3%

Source: FMI Security and Loss Prevention 2006